[Korean] Good afternoon. My name is Young-Gyu Park, the IRO of SK Telecom. Today's conference call will consist of the earnings presentation by our CFO, Soo Cheol Hwang, on the earning results of Q2 2013, as well as future management plans and strategic direction, followed by a Q&A session. [Korean] To help deepen your understanding, we also have executives from the relevant business units with us today. [Korean] The conference call will proceed with consecutive interpretation. Let me remind you that all of the forward-looking statements are subject to change depending upon the macroeconomic and market conditions. With that, let me invite our CFO.

[Korean] Good afternoon, my name is Soo Cheol Hwang, the CFO of SK Telecom. [Korean] Let me start with the consolidated financial results for the second quarter. [Korean] Although there was some impact from the widening customer benefits, such as the unlimited calling price plans, revenue was boosted by the LTE subscriber base expansion and the growth of the corporate B2B solution business recording KRW 4,164,200,000,000, up 1.3% quarter-on-quarter and 3.9% year-on-year. [Korean] Operating income climbed 34.8% quarter-on-quarter and 33.2% year-on-year to KRW 553.4 billion, thanks to our efforts to refrain from costly subscriber acquisition competition, as well as our focus on service-centric market leadership to enhance customer value. [Korean] Net income also picked up 35.2% compared to the previous quarter to KRW 467.7 billion, boosted by the earnings enhancement of our invested companies, including SK Hynix. [Korean] Such gains in both the top line and bottom line, can be attributed to our endeavors to strengthen tariff and service-related customer benefits; to expand LTE services, enabling high-quality data experience; and to curb extensive competition, among others. SKT will continue to do its utmost to help advance the ICT industry in Korea by launching world-leading services while help shaping healthy competitive landscapes. [Korean] Let me now address our strategic direction and results by business areas. [Korean] As we usher in the high-speed mobile era, we are initiating the data-driven changes, while shifting the marketing paradigm away from the subsidy raise towards product and service-oriented focus. [Korean] SKT's market stabilization efforts are already bearing fruit. The retention subsidy program for handset upgrades by long-term customers is taking up over 70% of all the handset-changing subscribers. The data refill service and membership limit refill service are welcomed by the market as well. The churn rate for Q2 marks 2.27%. Since the annual churn…

[Operator Instructions] [Korean] The first questions will be provided by Mr. Kim Hoe Jae from Daishin Securities. And the next question was provided by Mr. Kyoung Jae Song from KTB Investment Securities.

[Korean] I have the following 2 sets of questions. First has to do with your ARPU. I was wondering whether you have any plans in the pipeline to introduce dedicated price plans, specifically for the LTE Advanced services? And along with that, could you also share with us your differentiation strategy to further enhance your ARPU going forward through the service enhancement activities, especially for the LTE-A area? And secondly, could you elaborate further on your future mid- to long-term strategies in order to differentiate your services, in terms of the subscriber base acquisition versus other peers, and other types of mid- to long-term service-enhancement strategy?

[Korean] As you are well aware, SK Telecom has launched the world's first LTE Advanced commercialized services, leading the market dynamics overall. As you're well aware, SK Telecom has launched the first ever LTE Advanced commercialized services, thereby leading the industry worldwide. [Korean] As you're well aware, as of the 26th of June, we have first commercialized our LTE Advanced services in a commercialized form in 42 separate metropolitan areas successfully. And as of July, at the current juncture, we have expanded the scope to include 34 major cities and also the major university areas throughout the nation, in 84 areas, particularly. [Korean] For your information, we do not currently have any particular dedicated price plans away from the existing LTE services specifically for the LTE Advanced. [Korean] And I believe that you should interpret this decision to be our commitment to provide better customer benefit for our subscribers going forward and to further enhance our competitiveness through our fundamental services. [Korean] Because customers now will be able to enjoy high-quality services at the lower affordable prices, and they will have access to larger amounts of data in the process. And going forward, I believe that our subscribers will have more number of options available to choose from the more high-end price plans available. [Korean] So I believe that you could perceive this strategy to be our commitment to create a new type of business model going forward, so that we could provide a more convenient of ease environment for data usage for our subscribers overall. [Korean] Let me address the second part of your question, regarding our overall company-wide growth strategy in our efforts to further expand the top line growth. [Korean] As you are well aware, we are very committed to providing very innovative products and services that is more data-centric to our subscribers, so that the subscribers could utilize more number of commercializable services available to them. Thereby, ultimately, leading to the top line growth. [Korean] And also, we would be focusing on the B2B business, as well as the conversion business areas, particularly in conjunction with our growth areas, including healthcare platform, et cetera. And we will be boldly moving away from the previously-existing closed format of the value chain system or the ecosystem in the industry, so that we could further expand open collaboration with various parties in the market. So that we could further develop new business models, and thereby, grow in the process.

[Korean] The next questions were presented by Mr. Kyoung Jae Song from KTB Investment Securities, and the following questions were presented by Mr. Yang Jong In from Hanngul Investment Securities. Jae Kyoung Song - KTB Investment & Securities Co., Ltd., Research Division: [Korean] Yes. I have the following 2 sets of questions. First has to do with the competitive landscape in the second half. If you look at the recent trend, it is quite positive to witness that the overall churn rate is on a downward trend. And I believe that KCC is quite committed to curbing excessive marketing competition. For instance, they have recently applied the station[ph] Of new subscriber acquisition on a particular player in the industry recently. And I believe that in the MMP arena, LG U+ is showing some strength as well. So I was wondering what is the view of SK Telecom's top management? How do you look at the outlook going forward in the second half of this year with regards to the competitive dynamics? And in dealing with such market dynamics, what is your strategy to deal with the market changes? And my second question has to do with your recent decision to sell shares or equity of LoEn, your subsidiary? And relatedly, could you explain and provide some clarity as to the effective reasons why you decided to sell those shares? And relatedly, any plans going forward regarding other second-tier subsidiaries, including SK Communications? How do you plan to actually treat and handle those companies going forward? And also, what is your overall bigger plan with regards to your SK Planet and other types of non-telecommunications related subsidiaries? Any big changes that we should anticipate with regards to your strategy relating to your subsidiaries?

[Korean] Let me first address your question regarding our outlook on the second half competitive dynamics and our company's strategy to deal with it. First of all, just as the first half of this year, also during the second half, we will be making our utmost efforts to further stabilize the market in the future. However, I believe that it will be partially hinging upon how the competitive dynamics evolve because of our competitors', I guess, commitment to and their willingness to participate in the market stabilization efforts. [Korean] However, considering the following factors, such as our company's intention and willingness to lead the market stabilization efforts, and also the fact that the penetration of the LTE subscriber is actually reaching a pretty critical level already, and the fact that the government is quite committed to curbing excessive subsidy competition, I do not anticipate overheated competition environment in the second half. [Korean] As for the market stabilization trend, I believe that this is a paradigm shift that is taking place in the industry in a structural fashion. Therefore, barring any excessive or extraordinary situations, I do not believe that the competitive dynamics will especially worsen into next year either. [Korean] As you are well aware, upon launching our LTE Advanced services, we have already acquired about 300,000 subscribers to date. [Korean] Based on our competitive edge in the LTE Advanced arena, we will be continuing to pursue marketing activities, focusing on our service-related competitive edge. [Korean] Therefore, I feel confident that we will be able to maintain our current leadership without spending excessive expenses with regard to the subsidy matters. [Korean] And to answer your second part of the question regarding our plans to deal with our subsidiaries, including SK Planet, we have with us the Head of the Finance Division of SK Planet and he will be addressing that question for you.

[Korean] My name is Young Chul Kim and I'm the Head of the Finance Division of SK Planet. [Korean] As you have heard already, on 18th of July this year, SK Planet's BoD meeting was held, and we decided to sell about 52.6% of the shares out of the total 67.6% equity holdings that we previously had in LoEn Entertainment. And after such decision, we have actually become the second largest shareholder, with 15% shareholding, following the first major shareholder, Star International Holdings. [Korean] This particular decision to sell shares of LoEn this time was a decision made for the following reasons. First of all, to further enable development of LoEn going forward, and also to enable and support the global expansion and growth of SK Planet. So therefore, this was a strategic decision to select and focus in the future. [Korean] And also, this share sales decision, actually, was a decision to actually emerge as a digital content platform and also as a -- and initially a[ph] Platform for both the domestic and global market, as the global platform operator as SK Planet going forward. So this was a strategic decision indeed. But even after this decision to sell the shares of LoEn Entertainment, we will still remain as the second-largest shareholder, and we will continue to do our best to create synergy between the 2 companies. Therefore, we do not anticipate any material change in our contents-related strategies. [Korean] According to the Fair Trade Act of Korea, there is a clause that has an item regarding the restricted acts on the second-tier subsidiaries by the holding company. So -- and that restriction period will end actually in 2 years time since the launch of SK Planet, which will happen to be the end of September of year 2013. So in order to address such restricted-act-related issues, including SK Communications, we would be addressing various options and considering those options related to other subsidiaries, and we will come to final decisions then. However, at this particular juncture, nothing concrete has been decided yet.

[Korean] The next questions were presented by Mr. Yang, Jong In from Hanggul Investment Securities. And the following questions will be presented by Mr. Lee, Dongseop from SK Securities. Jong In Yang - Korea Investment & Securities Co., Ltd., Research Division: [Korean] I also have the following 2 questions. If you look at the second quarter ARPU, on a quarter-on-quarter basis, you have grown by about 1%, but when you compare that against your peers in the industry, the growth rate itself is not as high as some of the competitors. So I would like to know the reasons why. And in the past, you have always maintained the #1 position in terms of the ARPU level among all 3 major MNOs in the country. So do you think that you will still be able to maintain such a position going forward? And secondly, you earlier mentioned that the number of subscribers for LTE Advanced services stood at about 300,000 as of July. So do you have any end-of-the-year guidance or target for that number?

[Korean] Your first question had to do with our ARPU growth rate potentially being a little bit less than that of our other competitors. As you said, for SK Telecom, the second quarter ARPU grew by about 1% on a quarter-on-quarter basis, and that speed itself might appear to be a little bit slower than anticipated. And if I may cite a couple of reasons for that, I believe that after the launching of the on-net off-net unlimited voice calling price plan launching, some of the subscribers, they tend to overuse the voice call that -- amount that is allocated to them, has been actually downgrading or affecting the overall ARPU in this regard. [Korean] However, the speed with which the existing subscribers opt to actually to downgrade into lower price plans is actually slowing down quite a bit. And at the same time, the newly-introduced LTE Advanced service subscribers are opting for high-level or high-end price plans, and such growth rate is actually becoming more pronounced. Therefore, by next quarter, we believe that the speed of ARPU growth will be recovering further. [Korean] And as you are well aware, the number of LTE subscribers and their proportion out of the total subscriber base is on a rise. Therefore, for SK Telecom, I believe that we have even more upside because that proportion happens to be a little bit lower for SK Telecom right now, so we have more room to grow. [Korean] And as you are well aware, as for SK Telecom, I believe that, aside from the LTE subscribers, we have relatively more loyal subscribers that are still using our 2G and 3G networks, and they do contribute quite a bit to our profitability as well. So compared to our other competitors, I think that we have more…

[Korean] The next questions will presented by Mr. Lee, Dongseop from SK Securities. And the following questions will presented by Mr. Kim, Hongseek from NH Investment Securities.

[Korean] I have a question about the operating income or profit of SK Telecom. If you look at the New and Others line item, it seems like it has grown by about 48.1% year-on-year and by 10% quarter-on-quarter. Although the absolute amount that is listed in that line item is rather small, the growth rate is quite significant. So I am quite interested to know whether I could get a better breakdown and what particular items contributed to such increase, that would be appreciated. And relatedly, could you share with us the profitability or the margin of that particular business? And I have another question. In your opening remarks, you mentioned that by year 2015, you anticipate the revenue of the solutions/B2B business to be at around KRW 1.5 trillion. So how much margin should we actually consider out of that total revenue number?

; [Korean] Actually, as you have mentioned, during the second quarter, if you look at the revenue numbers out of that line item called New and Others, the revenue number has actually grown quite a bit. [Korean] As you can see, the most notable growth comes from the B2B solutions area. [Korean] And for your information, we have actually selected key business areas, including Smart Store, and also Smart Cloud, and green and safety, and an added [ph] payment, as well as Smart Work, as the 5 core solutions business areas. So we believe that such B2B solutions business will further contribute to our top line going forward. [Korean] And for your information, for the entire 2013 as a whole year, we are looking at the B2B revenue of about KRW 1.8 trillion. And we hope to continue to expand the share of the solutions business out of the total revenue for B2B going forward. So our goal is to actually expand it all the way up to KRW 530 billion for the year. [Korean] And you asked about the margin out of this particular top line number, but at this particular juncture, I believe that rather than simply focusing on the margin side, we believe that the revenue growth is more significantly important. [Korean] For your information, at this particular moment, in the B2B solutions area, the average margin stands at about 10%. [Korean] And I believe that the margin trend going forward will be increasing year-on-year for the next couple of years from the current level.

[Korean] The next questions will presented by Mr. Kim, Hongseek from NH Investment Securities. And the following questions will presented by Mr. Sam Min from Morgan Stanley. Hongseek Kim - NH Investment & Securities Co., Ltd., Research Division: [Korean] I have the following 2 questions actually, regarding ARPU, that is. During the second quarter, I was wondering how much impact SK Telecom has experienced from the launching of the unlimited voice calling price plan. And of the newly-acquired LTE subscribers, I'm talking about the new acquisitions, of such numbers, what's the percentage of the new subscribers opting for the unlimited voice calling option? And also, and I believe that -- and also out of the total LTE subscribers, how many or what is the trend of those subscribers opting for KRW 60,000 or higher price plans? Is that ratio actually going up again? That's my first part of the question. And secondly, as you are well aware, your second quarter ARPU growth was not that significant. But if you recall, in the earlier conference calls, you mentioned that -- anticipating this year's fourth quarter ARPU, you said that you could possibly grow the ARPU by 8% on a year-on-year basis. So looking at the recent trend, do you believe that you could still achieve that guidance or target?

[Korean] As for the unlimited calling, on-net off-net unlimited calling price plans, there are mixed results of options chosen by the subscribers. Some are downgrading and some are upgrading. So it's a mixed result. [Korean] And for your information, out of the newly-acquired LTE subscribers, those opting for the unlimited on-net off-net voice calling price plans, about 70% to 80% of the newly-acquired subscribers are opting for price plans higher than KRW 69,000. [Korean] However, for your information, if you look at the trend of the recently-launched LTE Advanced service subscribers, those opting for price plans higher than KRW 69,000 happens to be above 95%. [Korean] Looking at the recent trend, we believe that the proportion of the high ARPU subscribers out of the total subscriber base is going to continue growing in the future. [Korean] Because of our efforts and thanks to the industry-wide efforts to focus on the retention-based paradigm shift, I believe that reaching the 8% growth of ARPU year-to-date, that was communicated with you in the beginning of the year, might not be met all the way, and we might miss the target slightly. [Korean] So if you simply compare the number against the 4Q, the fourth quarter of this year, which is the year-end, we might actually miss the target slightly. But if you compare the annual average ARPU of the previous year versus fiscal year 2013, I believe that we could anticipate about more than 4% growth on a year-on-year basis. [Korean] I ask for your understanding in that the subscriber structure or the mixture between the different MNOs in the country happen to be quite differentiated or different. Therefore, I don't think that we could compare ARPU numbers apples-to-apples between different MNOs.

[Korean] The next questions will presented by Mr. Sam Min from Morgan Stanley.

I was wondering if you can share management's thoughts on current shareholder return policy, as well as how this policy can change going forward? I guess the focus is on absolute cash dividends per share versus a payout policy, considering now that profitability appears to be improving with falling marketing costs. Secondly, do you think that at some point in the future, your dividend policy can be pegged to consolidated earnings? If you look at your parent net income, as well as consolidated net income, the spread appears to be getting wider, and it appears that, that could only continue going forward. If you can share your thoughts on sort of broader perspective on current shareholder policy to how this can change going forward, I would appreciate it. [Korean]

[Korean] With regards to the shareholder policy of the company, I believe that we have been consistently communicating with the market the following fact. I believe that it is very critical to strike the right balance between shareholder return, growth of the company, and also a stable and sound financial structure of the company. [Korean] At this particular juncture, we believe that we have many factors to consider, including the ongoing spectrum bidding process, as well as the competitive dynamics, and also the need to secure enough funding for future growth. So based on such considerations, I believe that we need to wisely manage cash management going forward. [Korean] As you are well aware, we have maintained the current level of the dividend policy since 2007 until the current period. And in the future, I believe that we will have to closely watch the market dynamics, as well as the financial structure of the company, to determine the most optimum of the dividend policy possible. [Korean] So at this particular moment, I don't think that it would be appropriate for me to just communicate with you that there are any major policy changes that are anticipated. [Korean] And our current dividend policy is actually basing our dividend amount based on the parent-only financial statements. And in the future, you asked whether we have any plans to actually base the dividend policy on the consolidated basis. And for instance, this year, because of the equity method gain arising from the Hynix-related earnings enhancement, our overall consolidated net income has grown. However, I don't think that means that we should move away from the parent-only method into the consolidated financial-statement-based dividend policy in the near future. [Korean] However, what I could tell you is that if you look at things from the consolidated perspective, there are those investor companies that we have equity holdings from SK Telecom. And once SK Telecom receives dividend income from those relevant investor companies, then upon receiving such dividend payments, we might actually consider various other options.

[Korean] The following questions will presented by Mr. Sean Oh from Merrill Lynch.

[Korean] I have the following 2 questions. Your competitors are already publicly disclosing their revenue related to handsets. And I believe that SK Telecom, according to your SEC filing in the U.S., under the line item Digital Handset, you have already reported about KRW 1 trillion worth of revenue coming from the handset. And this is a larger amount even compared to the New and Other revenue line items. And so, I was wondering when do you plan to actually publicly disclose the potential handset-related revenue going forward on a quarterly basis? That's my first part of the question. And secondly, if you look at the consolidated numbers versus the parent-only numbers, if you look at the Other revenue item, there is a line item that is actually positive under consolidated numbers, but then again, if you look at the parent-only, there is a minus figure. And the difference and the gap between the 2 numbers happens to be about KRW 187.6 billion. So could you explain why such gap exists? And if that number has to do with the accounts receivables or handset factoring receivables, then why are you treating such line items under the Operating Income section, instead of Other section accounting-wise?

[Korean] Unlike our competitors, I could remind you that we have a separate entity, which is an investor company by SK Telecom, that is actually or solely handling these handset-related revenue matters. [Korean] For your information, the company in charge of the handset-revenue-related business happens to be PS&M, and we do need to check the exact numbers with that entity before getting back to you. So after this conference call, we will definitely get back to you with the accurate numbers. [Korean] And you asked about the difference between the parent-only and the consolidated numbers in terms of the nonoperating income item. And as you can see, if you look at the parent-only line item, it is showing a minus number. And I could tell you that it has mainly to do with the valuation loss on the exchangeable bond issued by SK Telecom.

[Korean] If there are no further questions, now, I would like to invite the closing remarks by our CFO.

[Korean] Thank you for taking part in today's conference call until the very end. We will make sure that all your questions and interests are reflected in our efforts to further improve our management. [Korean] As mentioned earlier, SK Telecom will do its best to lead the paradigm shift towards data-centric era and to stabilize the market with retention-focused activities. We will continuously strive to maximize enterprise value, as well as shareholder value. And we ask for your continued support and encouragement.

[Korean] This concludes the earnings call for Q2 2013. Thank you very much.